Moleculin Biotech, Inc. 10-Q

Item 1. Financial Statements Moleculin Biotech, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share and per share data) (Unaudited) June 30, December 31, 2026 2025 Assets Current assets: Cash and cash equivalents $ 7,262 $ 8,878 Prepaid expenses and other current assets 1,461 808 Total current assets 8,723 9,686 Intangible assets 11,148 11,148 Other non-current assets 900 900 Operating lease right-of-use asset 254 314 Furniture and equipment, net 62 78 Total assets $ 21,087 $ 22,126 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 4,337 $ 3,508 Accrued expenses and other current liabilities 4,976 3,346 Total current liabilities 9,313 6,854 Operating lease liability - long-term, net of current portion 147 222 Warrant liability 40 44 Total liabilities 9,500 7,120 Commitments and contingencies (Note 7) Stockholders' equity Preferred stock, $ 0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding — — Common stock, $ 0.001 par value; 500,000,000 shares authorized; 7,100,000 and 3,199,228 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 7 3 Additional paid-in capital 238,128 220,997 Accumulated other comprehensive income (loss) ( 64 ) 10 Accumulated deficit ( 226,484 ) ( 206,004 ) Total stockholders’ equity 11,587 15,006 Total liabilities and stockholders’ equity $ 21,087 $ 22,126 See accompanying notes to these condensed consolidated financial statements. 3 Table of Contents Moleculin Biotech, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues $ — $ — $ — $ — Operating expenses: Research and development 5,450 3,600 10,828 7,036 General and administrative 2,103 2,091 4,591 4,568 Depreciation and amortization 8 29 16 59 Total operating expenses 7,561 5,720 15,435 11,663 Loss from operations ( 7,561 ) ( 5,720 ) ( 15,435 ) ( 11,663 ) Other income (loss): Gain (loss) from change in fair value of warrant liability ( 7 ) ( 560 ) 10,763 ( 560 ) Transaction costs allocated to warrant liabilities ( 2 ) ( 1,207 ) ( 695 ) ( 1,207 ) Loss on issuance of warrant liabilities — ( 10,352 ) ( 15,158 ) ( 10,352 ) Other income, net 13 4 88 13 Interest income (expense), net ( 78 ) 26 ( 43 ) 56 Net loss $ ( 7,635 ) $ ( 17,809 ) $ ( 20,480 ) $ ( 23,713 ) Warrant deemed dividend ( 329 ) — ( 2,094 ) — Net loss available to common stockholders $ ( 7,964 ) $ ( 17,809 ) $ ( 22,574 ) $ ( 23,713 ) Net loss per common share - basic and diluted $ ( 1.40 ) $ ( 28.68 ) $ ( 4.60 ) $ ( 47.61 ) Weighted average common shares outstanding, basic and diluted 5,680,717 621,056 4,906,899 498,087 Net loss $ ( 7,635 ) $ ( 17,809 ) $ ( 20,480 ) $ ( 23,713 ) Other comprehensive income (loss): Foreign currency translation ( 12 ) — ( 74 ) 3 Comprehensive loss $ ( 7,647 ) $ ( 17,809 ) $ ( 20,554 ) $ ( 23,710 ) See accompanying notes to these condensed consolidated financial statements. 4 Table of Contents Moleculin Biotech, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ ( 20,480 ) $ ( 23,713 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 16 59 Stock-based compensation 816 902 Change in fair value of warrant liability ( 10,763 ) 560 Loss on issuance of warrant liabilities 15,158 10,352 Operating lease, net ( 16 ) 116 Transaction costs allocated to warrant liabilities 695 1,207 Changes in operating assets and liabilities: Prepaid expenses and other assets ( 653 ) ( 1,503 ) Accounts payable 829 1,526 Accrued expenses and other current liabilities 1,630 348 Net cash used in operating activities ( 12,768 ) ( 10,146 ) Cash flows from investing activities: Net cash used in investing activities — — Cash flows from financing activities: Proceeds from sale of common stock, pre-funded and common warrants and warrant inducement, net of issuance and transaction costs 7,608 13,412 Proceeds from exercise of warrants 2,817 10 Proceeds from issuance of common stock under at-the-market equity program, net of transaction costs 800 — Net cash provided by financing activities 11,225 13,422 Effect of exchange rate changes on cash and cash equivalents ( 73 ) 3 Net increase (decrease) in cash and cash equivalents ( 1,616 ) 3,279 Cash and cash equivalents - beginning of period 8,878 4,278 Cash and cash equivalents - end of period $ 7,262 $ 7,557 Non-cash investing and financing activities: Equity warrants issued in relation to liability classified warrant inducements $ 23,435 $ — Reclassification of warrant liabilities to equity upon contractual reset of exercise price $ 12,675 $ — Deemed dividends in connection with warrant amendments $ 2,094 $ — Offering costs included in accounts payable and accrued liabilities $ — $ 553 Transaction costs related to the sale of common stock, pre-funded and common warrants, and warrant inducements $ — $ 584 See accompanying notes to these condensed consolidated financial statements. 5 Table of Contents Moleculin Biotech, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except for shares) (Unaudited) Six Months Ended June 30, 2026 Common stock - shares Common stock - Par Value Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Balance, December 31, 2025 3,199,228 $ 3 $ 220,997 $ ( 206,004 ) $ 10 $ 15,006 Warrant inducement and exercise of common stock warrants 2,122,652 2 — — — 2 Issuance of common stock in connection with Consulting Agreements 6,409 — — — — — Issuance of common stock under at-the-market equity program, net of transaction costs 3,785 — 18 — — 18 Warrants exercised 2,279 — 9 — — 9 Common stock issued upon vesting of restricted stock units (net of taxes) 1,997 — — — — — Reclassification of warrant liabilities to equity upon contractual reset of exercise price — — 12,675 — — 12,675 Warrant deemed dividend — — 1,765 — — 1,765 Deemed dividend in connection with warrant amendment — — ( 1,765 ) — — ( 1,765 ) Stock-based compensation — — 380 — — 380 Consolidated net loss — — — ( 12,845 ) — ( 12,845 ) Cumulative translation adjustment — — — — ( 62 ) ( 62 ) Balance, March 31, 2026 5,336,350 $ 5 $ 234,079 $ ( 218,849 ) $ ( 52 ) $ 15,183 Warrants exercised 1,396,500 2 2,807 — — 2,809 Issuance of common stock under at-the-market equity program, net of transaction costs 354,757 — 806 — — 806 Issuance of common stock in connection with Consulting Agreements 12,393 — — — — — Warrant deemed dividends — — 329 — — 329 Deemed dividend in connection with warrant amendments — — ( 329 ) — — ( 329 ) Stock-based compensation — — 436 — — 436 Consolidated net loss — — — ( 7,635 ) — ( 7,635 ) Cumulative translation adjustment — — — — ( 12 ) ( 12 ) Balance, June 30, 2026 7,100,000 $ 7 $ 238,128 $ ( 226,484 ) $ ( 64 ) $ 11,587 Six Months Ended June 30, 2025 Common stock - shares Common stock - Par Value Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Balance, December 31, 2024 135,155 $ — $ 183,693 $ ( 172,444 ) $ ( 41 ) $ 11,208 Warrant inducement and exercise of repriced common stock warrants at $ 1.00 per share 233,143 1 5 — — 6 Warrants exercised 150,801 — 4 — — 4 Issued for cash - sale of common stock, pre-funded and common warrants 46,000 — 1 — — 1 Stock-based compensation — — 485 — — 485 Consolidated net loss — — — ( 5,904 ) — ( 5,904 ) Equity warrants issued — — 7,988 — — 7,988 Cumulative translation adjustment — — — — 3 3 Balance, March 31, 2025 565,099 $ 1 $ 192,176 $ ( 178,348 ) $ ( 38 ) $ 13,791 Common stock issued upon vesting of restricted stock units (net of taxes) — — — — — — Warrants exercised 244,319 6 — — — 6 Issued for cash - sale of common stock, pre-funded and common warrants 398,881 10 — — — 10 Stock-based compensation — — 417 — — 417 Consolidated net loss — — — ( 17,809 ) — ( 17,809 ) Cumulative translation adjustment — — — — — — Balance, June 30, 2025 1,208,299 $ 17 $ 192,593 $ ( 196,157 ) $ ( 38 ) $ ( 3,585 ) See accompanying notes to these condensed consolidated financial statements. 6 Table of Contents Moleculin Biotech, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. Nature of Business The terms “MBI” or “the Company”, “we”, “our” and “us” are used herein to refer to Moleculin Biotech, Inc. MBI is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015. MBI is a late-stage pharmaceutical development company currently conducting a pivotal Phase 2/3 trial evaluating Annamycin, also known by its non-proprietary name "naxtarubicin", in combination with cytarabine for the treatment of subjects with relapsed/refractory (R/R) acute myeloid leukemia (AML). The Company has two additional portfolios of technologies for hard-to-treat cancers and viruses with clinical and preclinical research funded primarily by investigators at academic institutions. In June 2018, we formed Moleculin Australia Pty. Ltd., a wholly owned subsidiary to oversee pre-clinical development in Australia. In April 2026, the board of directors of both MBI and the Australian subsidiary approved the closing of this subsidiary to reduce corporate overhead costs. With the MIRACLE trial focused in the US, Europe, and, possibly, the Middle East, future activities are not anticipated to include Australia. Each of its three core technologies is based substantially on discoveries at, or in conjunction with and with rights originating from the University of Texas MD Anderson Cancer Center (MD Anderson) in Houston, Texas, and features one or more drugs that have successfully completed a Phase 1 clinical trial. Three of its drug candidates have shown human activity in clinical trials and are currently or have been in Phase 1B/2 or Phase 2 clinical trials. Since MBI’s inception, its drugs have completed, are in planning, are currently in, or have been permitted to proceed in, eighteen clinical trials. Annamycin, in a unique multilamellar lipid formulation, is the Company’s lead molecule, has completed several clinical trials in AML and soft tissue sarcoma and in March 2025 began treating subjects in its Phase 2/3 clinical trial for the treatment of R/R AML. The latter is the main focus of the Company’s management and resources. Annamycin was in two concluded Phase 1B/2 clinical trials for treating soft tissue sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS), one of which was physician-sponsored. The Company announced in 2025 a physician-sponsored trial for Annamycin for the treatment of pancreatic cancer intended to begin in the second half of 2026. Additionally, there is another Phase 1B/2 clinical trial that is physician sponsored which is investigating using WP1066 in combination with radiation for the treatment of glioblastoma, a form of brain cancer. There is another pediatric brain tumor trial also in the planning stages for late 2026. The physician-sponsored trials utilize primarily external funds, such as grant funds, which are not presented in these financial statements. The Company does not have manufacturing facilities, and all manufacturing activities are contracted out to third parties. Additionally, the Company does not have a sales organization. The Company’s overall strategy is to seek potential out-licensing or outsourcing opportunities with development/commercialization strategic partners who are better suited for the marketing, sales and distribution of its drugs, if approved. In 2019, the Company sublicensed its technologies to Animal Life Sciences, Inc. (ALI), to enable research and commercialization for non-human use and share development data. As part of this agreement, ALI issued to the Company a 10 % equity interest in ALI. 2. Basis of presentation, principles of consolidation, and significant accounting policies and liquidity Reverse Stock Split - On December 1, 2025, pursuant to authority granted by our stockholders, the Company effected a 1 -for- 25 reverse stock split of our common stock and the filing of an amendment to our amended and restated certificate of incorporation to effectuate the reverse stock split. The amendment provides that, every twenty-five shares of our issued and outstanding common stock will automatically be combined into one issued and outstanding share of common stock, without any change in par value per share, which will remain at $0.001. The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. Certain amounts in the financial statements, the notes thereto, and elsewhere in the Form 10 -Q may be slightly different than previously reported due to rounding up of fractional shares as a result of the reverse stock split. Basis of Presentation – Condensed Consolidated Financial Information - The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for financial information, and in accordance with the rules and regulations of the US Securities and Exchange Commission (SEC) with respect to Form 10 -Q and Article 8 of Regulation S- X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The condensed consolidated financial statements furnished reflect all normal adjustments, which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of December 31, 2025 , and for the year then ended, including the notes thereto contained in the Form 10 -K filed with the SEC on March 18, 2026. Principles of Consolidation - The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment. All material long-lived assets of the Company reside in the United States. In accordance with FASB ASC Topic 280, Segment Reporting, the Company views its operations and manages its business as one segment. As a result, the financial information disclosed herein represents all of the material financial information related to its principal operating segment. Segment Information - Management has determined that the Company operates in one reportable segment, which is the development and commercialization of drug products. The Company's chief operating decision maker (CODM) is its Chief Executive Officer and Chairman, who reviews financial information presented on a consolidated basis. The CODM primarily uses consolidated net loss, which is also reported on the Consolidated Statements of Operations and Comprehensive Loss as net loss, to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the assessment of segment performance and allocation of resources. The significant expense categories within net loss from operations that the CODM regularly reviews are research and development expenses and general and administrative expenses. The significant expense categories and subcategories are reported on the Consolidated Statements of Operations and Comprehensive Loss. Other expenses included in the Company’s net loss include change in fair value of warrant liabilities, other income (expense), interest income, net, and any additional non-operating expenses that are reported on the Consolidated Statements of Operations and Comprehensive Loss. Significant Accounting Policies - The Company's significant accounting policies are described in Note 2, Basis of Presentation, principles of consolidation and significant accounting policies and liquidity, to the consolidated financial statements included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2025 . There have been no material changes to the significant accounting policies during the three and six months ended June 30, 2026 , except as discussed further below under Changes in Accounting Policy. 7 Table of Contents Use of Estimates - The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of financial statements. Estimates are used in the following areas, among others: fair value estimates on intangible assets, warrants, and stock-based compensation expense, as well as accrued expenses and taxes. Going Concern and Liquidity - These condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary financing to continue operations and the attainment of profitable operations. As of June 30, 2026 , the Company had an accumulated defici t of $ 226.5 million since inception and had not yet generated any revenues from operations. Additionally, management anticipates that its cash on hand of $ 7.3 million a s of June 30, 2026 , is not sufficient to fund its planned operations for a period of at least one year from when these condensed consolidated financial statements are issued. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company intends to seek additional funding through one or more of the following: a combination of equity offerings, debt financings, government or other third -party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. There can be no assurance that such events or a combination thereof can be achieved. Cash and Cash Equivalents - Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company maintains cash accounts principally at one financial institution in the US, which at times, may exceed the Federal Deposit Insurance Corporation’s limit. The Company has not experienced any losses from cash balances in excess of the insurance limit. The Company’s management does not believe the Company is exposed to significant credit risk at this time due to the financial condition of the financial institution where its cash is held. Intangible Assets – Acquired intangible assets identified as in-process research and development (IPR&D) assets, are considered indefinite lived until the completion or abandonment of the associated research and development efforts. If the associated research and development effort is abandoned, the related IPR&D assets will be written-off and the Company will record a noncash impairment loss on its statements of operations. For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives. Intangible assets are tested for impairment on an annual basis, which was completed as of September 30, 2025, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. The Company evaluates the recoverability of intangible assets periodically and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. No impairments of intangible assets have been identified during any of the periods presented. Prepaid Expenses and Other Current Assets - Prepaid expenses and other current assets consist of the following (in thousands): June 30, 2026 December 31, 2025 Prepaid insurance $ 1,035 $ 512 Vendor prepayments and deposits 388 278 Prepaid sponsored research 34 11 Non-trade receivables 4 7 Total prepaid expenses and other current assets $ 1,461 $ 808 Other Non-Current Assets - The Company provided a cash deposit on the MB- 108 trial that is expected to be held as a prepayment until the end of the study in 2029. Fair Value of Financial Instruments - The Company's financial instruments consist primarily of non-trade receivables, accounts payable, accrued expenses and its warrant liability. The carrying amount of non-trade receivables, accounts payable, and accrued expenses approximates their fair value because of the short-term maturity of such. The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three -level fair value hierarchy in accordance with US GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1 ) and lowest priority to unobservable inputs (Level 3 ). Assets and liabilities recorded in the condensed consolidated balance sheets at fair value are categorized based on a hierarchy of inputs as follows: Level 1 – Unadjusted quoted prices in active markets of identical assets or liabilities. Level 2 – Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 – Unobservable inputs for the asset or liability. The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of warrant liability discussed in Note 4. The following table provides the financial liabilities reported at fair value and measured on a recurring basis at June 30, 2026 and December 31, 2025 (table in thousands): Description Fair Value Level 1 Level 2 Level 3 Fair value of warrant liability as of June 30, 2026: $ 40 $ — $ — $ 40 Fair value of warrant liability as of December 31, 2025: $ 44 $ — $ — $ 44 8 Table of Contents The table below of Level 3 liabilities (table in thousands) begins with the valuation as of the beginning of the second quarter and then is adjusted for changes in fair value that occurred during the second quarter. The ending balance of the Level 3 financial instrument presented above represents the Company's best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Three Months Ended June 30, 2026 Warrant Liability Long-Term Balance, March 31, 2026 $ 33 Change in fair value - net 7 Balance, June 30, 2026 $ 40 The table below of Level 3 liabilities (table in thousands) begins with the valuation as of December 31, 2025 and then is adjusted for changes in fair value that occurred during the six months ended June 30, 2026 . The ending balance of the Level 3 financial instrument presented above represents the Company's best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Six Months Ended June 30, 2026 Warrant Liability Long-Term Balance, December 31, 2025 $ 44 Warrants issued 23,435 Warrants exercised ( 1 ) Warrants reclassification ( 12,675 ) Change in fair value - net ( 10,763 ) Balance, June 30, 2026 $ 40 Loss Per Common Share - Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. For purposes of this calculation, options to purchase common stock, restricted stock units subject to vesting and warrants to purchase common stock are considered to be common stock equivalents. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. For the three months ended June 30, 2026 and 2025 , approximately 12.7 million and 1.0 m illion, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their anti-dilutive effect. For the six months ended June 30, 2026 and 2025, approximately 11.3 million and 0.7 million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their anti-dilutive effect. Subsequent Events - The Company’s management reviewed all material events through the date of these unaudited condensed consolidated financial statements were issued. See Note 8. Subsequent Events included in these unaudited condensed financial statements. Recent Accounting Pronouncements - In December 2025, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2025 - 12, Codification Improvements, which clarifies various topics in the Accounting Standards Codification to improve consistency and address technical corrections. Key improvements include (clarifying the calculation of diluted earnings per share (EPS) when a loss from continuing operations exists. The amendments in this update are effective for the Company beginning January 1, 2027, with early adoption permitted. Currently, the Company is assessing the potential impact of this guidance on its condensed consolidated financial statement disclosures. In December 2025, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2025 - 11, Interim Reporting (Topic 270 ): Narrow-Scope Improvements. This standard clarifies current interim reporting requirements on topic 270 and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard will be effective for fiscal years beginning after December 15, 2027, with the option to apply it retrospectively. Early adoption is allowed. Currently, the Company is assessing the potential impact of this guidance on its condensed consolidated financial statement disclosures. In November 2024 and January 2025, FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures but expects additional disclosures upon adoption. There are no other effective pronouncements, or pronouncements issued but not yet effective, if adopted, that would have a material effect on the accompanying financial statements. Change in Accounting Policy - During the quarter ended September 30, 2025, the Company changed its accounting policy related to the classification of certain outstanding warrants. Prior to the change in accounting policy, the Company's policy was to account for warrants with a certain contingent settlement provision as liability warrants, initially measuring them at fair value on the date of issuance. The warrants were previously remeasured at fair value at the end of each reporting period, with the related liability reflected on the Company's balance sheet. The changes in fair value during each previous reporting period were recognized as a gain (loss) from change in fair value of warrant liability in the Company's condensed consolidated statement of operations. The Company has changed its policy and warrants that contain this certain contingent settlement provision will be accounted as equity under ASC 815 - 40 - 15 - 7C through 15 - 7F and ASC 505. The Company concluded that accounting for its warrants as equity instruments is preferable under ASC 250, as equity classification better reflects the economic substance of the arrangement and enhances the clarity and consistency of the Company's financial reporting. As a result of this change in accounting policy, all warrants issued prior to 2025, and certain warrants issued in 2025, that were previously accounted for as liability awards due to the certain contingent settlement provision will now meet the equity classification criteria under ASC 815 - 40 and will be classified as equity instruments. The effects of the change in accounting policy from warrant liabilities to equity have been retrospectively applied to all periods presented in these condensed consolidated financial statements. Certain warrants issued in 2025 will continue to be classified as a liability as these warrants contain features other than the contingent settlement provision that cause liability classification. See also Note 4 - Warrants and Equity. 9 Table of Contents As a result of the change in accounting policy, the Company adjusted accumulated deficit, and additional paid-in capital to reverse previously recorded mark-to-market fair value changes of the liability-classified warrants. Warrants classified as liability warrants were adjusted retrospectively from January 2017 to June 2025, and the beginning balances have been adjusted for the policy change to equity warrant classifications. Accumulated deficit as of January 1, 2024, changed from $ 131.6 million, as reported under the liability classification, to $ 146.4 million under the equity classification. The following financial statement line items were impacted by the change in accounting policy, as shown in the tables below (in thousands, except per common share data): Three Months Ended Six Months Ended June 30, 2025 June 30, 2025 As Reported As Adjusted Effect of As Reported As Adjusted Effect of Under Old Policy Under New Policy Change Under Old Policy Under New Policy Change Condensed Consolidated Statement of Operations Gain (loss) from change in fair value of warrant liability $ 9,609 $ ( 560 ) $ ( 10,169 ) $ 18,663 $ ( 560 ) $ ( 19,223 ) Transaction costs allocated to warrant liabilities ( 1,207 ) ( 1,207 ) — ( 2,995 ) ( 1,207 ) 1,788 Loss on issuance of warrant liabilities ( 10,352 ) ( 10,352 ) — ( 18,150 ) ( 10,352 ) 7,798 Net loss ( 7,640 ) ( 17,809 ) ( 10,169 ) ( 14,076 ) ( 23,713 ) ( 9,637 ) Net loss per common share - basic and diluted ( 12.30 ) ( 28.68 ) ( 16.38 ) ( 28.26 ) ( 47.61 ) ( 19.35 ) Other comprehensive income (loss) ( 7,640 ) ( 17,809 ) ( 10,169 ) ( 14,073 ) ( 23,710 ) ( 9,637 ) The change in accounting policy did not have a material effect on the statement of cashflows for any current or prior period presented. 3. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following components (in thousands): June 30, 2026 December 31, 2025 Payroll and bonuses $ 2,612 $ 1,821 Research and development 1,911 1,117 Legal, regulatory, professional and other 308 271 Operating lease liability - current 145 137 Total accrued expenses and other current liabilities $ 4,976 $ 3,346 4. Warrants and Equity Warrant and Stock Issuances During June of 2026, Series H warrants were exercised for the issuance of 1,396,500 shares at $ 2.01 per share for proceeds of approximately $ 2.8 million. On February 19, 2026, the Company entered into warrant inducement agreements with certain holders of our existing equity-classified Series E and Series F warrants. Pursuant to the agreements, the holders exercised warrants to purchase an aggregate of 2,122,652 shares of the Company’s common stock at an exercise price of $ 3.90 per share, resulting in aggregate gross proceeds of approximately $ 8.3 million. In consideration for such exercises, the Company issued new Series H warrants to purchase up to 6,367,956 shares of common stock. The Series H warrants have a five -year term and had an initial exercise price of $ 2.3976 per share. The warrants contain customary anti-dilution adjustments and beneficial ownership limitations and became exercisable upon stockholder approval in April 2026. As a result of the completion of this transaction, the exercise price of the Company’s outstanding Series E warrants was adjusted to $ 3.00 per share, and the number of shares underlying the remaining outstanding Series E warrants increased, in each case pursuant to the anti-dilution provisions contained in such warrants. In addition, the exercise price of the Company’s outstanding Series F warrants was adjusted to $ 2.75 per share, and the exercise price of the Company’s outstanding Series G warrants was adjusted to $ 2.3976 per share. During the six months ended June 30, 2026, the Company recorded deemed dividends resulting from the downward adjustment to the exercise price of certain warrants and the increase in the number of shares underlying certain outstanding warrants, in each case triggered by the anti-dilution provisions contained in the original warrant agreements. The deemed dividends were recorded to additional paid-in capital and recognized as a reduction to income available to common stockholders. Warrants The Company uses the Monte Carlo simulation model to reflect the impact of the down round feature to the warrants and also uses a Black-Scholes option pricing model (BSM) to determine the fair value of its liability warrants at each reporting date, the date of issue and any other measurement date during the quarter. The risk-free interest rate assumption is based upon observed interest rates on zero coupon US Treasury bonds linearly interpolated to obtain a maturity period commensurate with the term of the warrants. Estimated volatility is a measure of the amount by which the Company's stock price is expected to fluctuate each year during the expected life of the warrants. 10 Table of Contents Liability Classified Warrants The assumptions used in determining the fair value of the Company's outstanding liability classified warrants are as follows: June 30, 2026 December 31, 2025 Risk-free interest rate 4.1 3.6 % Volatility 125.1 114.3 % Expected life (years) 4.1 4.6 Dividend yield — % — % A summary of the Company's liability classified warrant activity during the six months ended June 30, 2026 and related information follows: Number of Shares Range of Warrant Exercise Weighted Average Weighted Average Remaining Contractual Under Warrant Price per Share Exercise Price Life (Years) Balance at January 1, 2026 14,240 $ 3.90 $ 3.90 $ 3.90 4.6 Granted 6,367,956 $ 2.40 $ 2.40 $ 2.40 5.2 Adjustment for VWAP 3,589 $ 3.00 $ 3.00 $ 3.00 4.1 Exercised ( 2,279 ) $ 3.90 $ 3.90 $ 3.90 5.2 Reclassed to equity warrants ( 6,367,956 ) $ 2.40 $ 2.40 $ 2.40 5.2 Balance at June 30, 2026 15,550 $ 3.00 $ 3.00 $ 3.00 4.1 Exercisable at June 30, 2026 15,550 $ 3.00 $ 3.00 $ 3.00 4.1 For a summary of the changes in fair value and the impact of changes in accounting policy associated with the Company's warrant liability for the six months ended June 30, 2026 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies and liquidity. Equity Classified Warrants A summary of the Company's equity classified warrant activity during the six months ended June 30, 2026 and related information follows: Number of Shares Range of Warrant Exercise Under Warrant Price per Share Balance at January 1, 2026 7,588,026 $ 2.75 $ 1,361.25 Granted 115,000 $ 2.48 $ 2.64 Adjustment for VWAP 593,085 $ 3.00 $ 3.00 Exercised ( 3,519,152 ) $ 2.01 $ 3.90 Reclassed from liability warrants 6,367,956 $ 2.40 $ 3.00 Expired warrants ( 191 ) $ 1,361.25 $ 1,361.25 Balance at June 30, 2026 11,144,724 $ 2.01 $ 1,155.00 Exercisable at June 30, 2026 10,982,056 $ 2.01 $ 1,155.00 At Market Issuance Sales Agreement (ATM) On December 23, 2025, the Company increased the maximum aggregate gross sales price of the Company’s common stock that may be offered, issued and sold under a certain At Market Offering Agreement ( 2025 ATM Agreement) with Roth Capital Partners, LLC (Roth), which the Company initially entered into in July 2025, from $ 6.5 million to $ 8.2 million. Pursuant to the terms of the 2025 ATM Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 8.2 million from time to time through or to Roth, acting as sales agent or principal. Roth may sell shares of the Company’s common stock in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and either party may terminate the 2025 ATM Agreement upon two business days’ notice. The Company paid Roth a commission equal to 3.0 % of the gross proceeds from any shares of common stock sold under the 2025 ATM Agreement, in addition to reimbursing certain expenses. The 2025 ATM Agreement will terminate upon the sale of shares having an aggregate offering price equal to the maximum amount authorized under the agreement. During the first quarter of 2026, the Company sold 3,785 s hares of common stock pursuant to the 2025 ATM Agreement for gross proceeds of approximately $ 18,000 . During May 2026, the Company sold an additional 354,757 shares of common stock pursuant to the 2025 ATM Agreement for net proceeds of approximately $ 0.8 million. The lowest price of the shares sold was $ 2.01 . As a result and due to provisions in certain warrants, deemed dividends of $ 0.3 million were recorded as a reduction to income available to common stockholders. 5. Stock-Based Compensation Stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 , respectively, is as follows (table in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 General and administrative $ 256 $ 300 $ 503 $ 665 Research and development 180 117 313 237 Total stock-based compensation expense $ 436 $ 417 $ 816 $ 902 11 Table of Contents The Company recorded stock compensation expense for the equity classified warrants relating to non-employee consulting agreements o f $ 47,000 a nd $ 29,000 for the three months ended June 30, 2026 and 2025 , and $ 86,000 and $ 56,000 for the six months ended June 30, 2026 and 2025, respectively, which are included in the table above. As of June 30, 2026 and 2025 , there were $ 305,000 and $ 319,000 in unrecognized stock compensation expense, respectively, related to the Company's equity classified warrants. As of June 30, 2026 , there wer e 14,105 shar es remaining to be issued under the Company's equity compensation plan. 6. Income Taxes Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal, state, or foreign income taxes in 2026 as a result of the losses recorded during the three and six months ended June 30, 2026 and the additional losses expected for the remainder of 2026 and cumulative net operating loss carryforwards. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As a result, as of June 30, 2026 and December 31, 2025 , the Company maintained a full valuation allowance for all deferred tax assets. The Company recorded no income tax provision for the three and six months ended June 30, 2026 and 2025 , respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 is nil . The income tax rates vary from the federal and state statutory rates primarily due to the change in fair value of the stock warrants, Internal Revenue Code Section 162 (m) limitations and ISO activity, as well as the valuation allowances on the Company’s deferred tax assets. The Company estimates its annual effective tax rate at the end of each quarterly period. Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowance could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections. On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing US tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act, repealing certain clean energy initiatives, in addition to other changes. The Company continues to evaluate the impact the new legislation will have on the consolidated financial statements, but the Company does not anticipate a significant impact due to the Company’s valuation allowance position. 7. Commitments and Contingencies In addition to the commitments and contingencies described elsewhere in these notes, see below for a discussion of the Company's commitments and contingencies as of June 30, 2026 . Lease Obligations Payable The following summarizes quantitative information about the Company's operating leases for the three and six months ended June 30, 2026 and 2025 , respectively (table in thousands): Three Months Ended June 30, Six Months Ended June 30, Lease cost: 2026 2025 2026 2025 Operating lease cost $ 37 $ 38 $ 75 $ 75 Variable lease cost 7 7 14 14 Total $ 44 $ 45 $ 89 $ 89 Th e Company executed an amendment to extend the corporate office lease until August 31, 2029, with an option to renew. The Company is required to remit base monthly rent of a pproximately $ 4,700 which will increase at an average approximate rate of 2 % each year. The Company is also required to pay additional rent in the form of its pro-rata share of certain specified operating expenses of the building. The Company has an extended lab lease until September 30, 2027, with no further right or option to renew. The Company recorded approximately $ 12,000 in sublease income for the three months ended June 30, 2026 and 2025 , and $ 37,000 for the six months ended June 30, 2026 and 2025 . Sublease income is recorded as other income, net on the Company's condensed consolidated statement of operations and comprehensive loss. Operating cash flows from operating leases w as $ 41,000 and $ 39,000 for the three months ended June 30, 2026 and 2025 , respectively, and $ 81,000 and $ 79,000 for the six months ended June 30, 2026 and 2025 , respectively. Licenses MD Anderson - Total expenses related to the Company's license agreements with MD Anderson w ere $ 33,000 for both the three months ended June 30, 2026 and 2025 , and $ 65,000 and $ 83,000 for the six months ended June 30, 2026 and 2025 , respectively. In October 2025, the Company entered into two separate options to license certain intellectual property related to WP1122 and a new formulation on WP1066. Such licenses are tied to continued support of sponsored research at MD Anderson discussed below. Sponsored Research Agreements - The expenses recognized under the agreements were $ 212,000 and $ 51,000 for the three months ended June 30, 2026 and 2025 , respectively, and $ 424,000 and $ 313,000 for the six months ended June 30, 2026 and 2025 , respectively. The Company entered into a research agreement with MD Anderson until 2027. Such research supports the development efforts of the Company's three core technologies. 12 Table of Contents 8. Subsequent Events On August 3, 2026, the Company completed a public offering of (i) 12,376,667 shares of common stock, or pre-funded warrants in lieu thereof, and (ii) Series I Warrants to purchase up to 37,130,001 shares of common stock. The combined public offering price was $ 0.75 per share of common stock (or pre-funded warrant in lieu thereof) and accompanying warrant. Each pre-funded warrant is exercisable into one share of common stock at an exercise price of $ 0.001 per share and expires when exercised in full. The Series I Warrants are exercisable into one share of common stock at an exercise price of $ 0.75 per share and expire on the five -year anniversary of the closing date. The Series I Warrants contain anti-dilution provisions that reduce the exercise price (subject to a floor price of $ 0.21 ) in the event the Company issues common stock or common stock equivalents at a price below the then-current exercise price, other than in connection with certain exempt issuances. In connection with the offering, the Company agreed not to issue any shares of common stock or securities convertible into common stock for 45 days after the closing date, subject to certain exceptions, and agreed not to effect any variable rate transaction for 180 days after the closing date. The Company received gross proceeds of approximately $ 9.3 million in the offering, before deducting placement agent fees and other offering expenses. The Company paid total placement agent fees and other offering expenses of approximately $ 0.8 million. Due to the pricing of the offering, and certain provisions, the exercise price of the Company’s outstanding Series G warrants was adjusted to $ 1.326 per share, and the exercise price of the Company’s outstanding Series H warrants was adjusted to $ 0.962 per share. The Company issued 11,088,334 common shares, and prefunded warrants for 1,288,333 shares, which were exercised shortly after the offering.